SOFI - SoFi: The Smart Money Is Short

2024-06-15 11:05:17 ET

Summary

• SoFi Technologies is popular with retail investors due to its "banking disrupted" narrative and exceptional growth in members.
• The stock has underperformed since its IPO despite progress on execution and strong guidance on future profitability.
• In a hard landing scenario, SOFI's accounting practices may lead to significant losses, potentially requiring capital raising, making it a risky investment for professional investors.
• In fact, the smart money perceives SOFI as the perfect macro hedge for a consumer-driven recession.

SoFi Technologies (SOFI) is a very popular stock with Retail investors. Many investors are true believers in the "disruption of banking" narrative. The thesis is that SOFI is developing superior cost-efficient branchless, digital banking solutions that can attract high-value customers (or members as it calls it) and then the flywheel is set in motion where it can cross-sell multiple products to the same client base and enhance the lifetime value of members and in the process deliver superior returns for shareholders....

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